Vornado pauses plan to redevelop area around Penn Station

February 16, 2023

Rendering courtesy of Gov. Kathy Hochul’s office

The plan to redevelop the area around Penn Station with several new skyscrapers is officially on hold. During a conference call this week, Steven Roth, the chief executive officer at Vornado Realty Trust, the developer behind the project, said new construction is “almost impossible” because of current market conditions, as Crain’s first reported.

As part of Gov. Kathy Hochul’s plan to rebuild Penn Station, Vornado would redevelop 18 million square feet of the Midtown West neighborhood, with tax revenue generated by the project funding the reconstruction of the transit hub. The proposal includes constructing 10 new buildings, which would contain mostly office space and 1,800 apartments, a portion of which would be affordable.

During Tuesday’s conference call, Roth said the financial markets have made it “almost impossible to build new,” according to Crain’s.

Michael Franco, president and chief financial officer of Vornado, said on the call the Penn District project could be delayed for two to three years, due to high-interest rates and challenges related to new development.

The state’s plan involves redeveloping Penn Station into a single-level hall that would be larger than the halls of Grand Central and Moynihan combined. Hochul’s proposal also adds eight acres of public space, including a 30,000-square-foot plaza, and expands underground corridors to subways on Sixth Avenue, which would connect commuters at Herald Square to Penn Station.

In September, the MTA tapped FXCollaborative and WSP USA as the architects behind the Penn Station Master Plan, with further assistance from London-based John McAslan + Partners. The project is estimated to cost $7 billion and several years to complete.

“Quarterly conditions may fluctuate, but Governor Hochul’s commitment to revitalizing Penn Station and the area surrounding it will not,” a spokesperson for the Empire State Development, the agency leading the project, said in a statement to the New York Times.

A spokesperson for Vornado told the Times the company supports the project long-term and continues to work on upgrading current office towers, Penn 1 and Penn 2.

“We fully support the state’s general project plan for the Penn District, are making very significant investments in our existing buildings and are leading public private partnerships to enhance this vital transit hub,” the company said.


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